Gold Forecast: Recovery After Downward Pressure at the Open

Christopher Lewis

More likely than not we are going to trade this market from more of a range-bound perspective.

Gold markets have fallen a bit on Friday to break down below the bottom of the candlestick from the Thursday session. The $1780 level looks to be offering support, as we have turned around to form a nice-looking hammer. Ultimately, this is a market that I think will continue to see more of a back-and-forth type of situation, as the hammer will attract a lot of attention.

If we can break above the top of the hammer from the session on Friday, it is very possible we may go looking to fill the gap above which is currently at the $1810 level, and then possibly even the $1830 level which is the top of the overall range. Keep in mind that gold is very volatile and choppy, so it makes sense that we would see a lot of noisy behavior.

The gold market is very sensitive to the US dollar and interest rates, which have been rising as of late in the United States. The market will continue to be very noisy, but if we were to break out of this range, there are a couple of destinations that I have in mind. If we were to break down below the bottom of the hammer for the trading session on Friday, it is very likely that we could go looking towards the $1760 level, an area that has been supportive in the past. On the other hand, if we turn around and rally to break above the top of the candlestick, I think at the very least we will probably go looking to fill that gap above. If we can break above there, then the market is likely to test the $1830 level, which is an area that has offered a lot of noise previously.

Looking at this chart, it appears that the market will continue to be very noisy and go back and forth, so I think more likely than not we are going to trade this market from more of a range-bound perspective, as we will continue to see a lot of confusion in the markets when it comes to interest rates and whether or not the Federal Reserve actions will cause a ripple effect.

Gold

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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